Quote from @Henry Clark:
Quote from @James Hamling:
Quote from @Henry Clark:
OP 2 dominoes if/when they fall will Crash the housing market in terms of price, on market inventory and days on market. From the bottom end of the market Illegal alien removal forget the politics and then when the stock market crashes and people lose jobs they will sell their investment units.
Another domino to look at are the large REITS and Funds. Just like failing Syndications, if their fundamentals such as occupancy, rates, capex change and financing they can be stressed.
I would be holding cash, identifying markets, putting in market notices on price drops on houses you’re tracking. Pick a 30/40% price drop point then invest. Dont wait for the bottom. Just make sure your personal income is secure. We are looking at buying a house in Italy but will rent. Then wait for prices to drop.
The downside of my notes above is inflation will creep in and the US dollar has to devalue. So waiting and holding cash has its downsides if done for an extended time.
The notion of removal of illegal immigrants crashing any market, more or less housing, is a "Spruce Goose". Proof, let's look to the "Deporter in Chief" administration of Obama. I have seen estimates in excess of over 3 million deported during Obama administration. While Trump "trumps" in deportation rhetoric, there deportation numbers are a fraction of that.
And what effect did we experience from deportations during Obama era? I don't recall any at all.
Do I think Trump will be able to deport tens of millions, no.
So while it makes good click bait and holds good political value to propagandize Trump will tank everything via deportations, the facts simply don't support any of it.
Next, persons loosing jobs.
The problem there is it's a transition, not freeing of realty. Every home owner gone bust, is a new tenant born into the rental market.
Surge the market with let's say 5 million foreclosures, means surging tenancy base by 5 million new tenant groups. There is not any excess of rental supply to uptake that. So what happens is a surge in owner occupant housing transitioning into rentals.
You won't get the post '08' style collapse. Tight inventory see's to that.
Prices would drop only as far as it takes for Investors to competitively step in. And what is it we hear day in and day out right now? Persons complaining they can't find a good buy.
I see investor purchasing stepping in around $200 monthly net cash-flow. And surging in volume as cash-flow grows from there. There will not be big paychecks on discount. Way too much pent up demand.
And yes, all roads lead to dollar devaluation.... And only 1 of the roads has dollar UP while simultaneously being inflated away; WW III.
Realize the wording above can turn a conversation easily.
“If/when” above. Forget the politics. Selling their “investment” properties.
The degree or magnitude of any change making an impact is hard to know. It’s a matter of Herd mentality.
Is it “less” new lower end renters? Is it 1mm people less, is it 20mm less? Is it a stock market correction of 10%, 20%, 50% that causes people to sell their investment properties?
Investors will sell their investment properties when they hit a certain point. Then your point other people will jump in. They have to have the cash or justify with a lender in the middle of a market downturn.
I’ll give you a hard number about markets. I used to raise cattle. There is a 10 year cattle price cycle. If the cowherd varies by 5% up or down, the price of beef goes up or down. Then ranchers will either sell their cowherd or build it up. Just a 5% shift dictates that market.
So the market changes I noted above will impact housing prices and availability just the timing and magnitude is a question.
Another example. We do business in Belize. One beachfront community had 1/2 of the units for sale during covid. Their revenue stream changed. No one was buying their units.
Normally such a thing as what were entertaining here would be an item of speculating how it would unfold. But as chance has it, we don't need to speculate, we have data from a case study to go off of; the 2008 Global Financial Crisis.
In the GFC, mortgage lending all but completely stopped. Because, contrary to what younger persons think, that's what the GFC originated, the mortgage financing system melting down in grand fashion, the MBS (Mortgage backed Securities) imploded in a cascade effect.
So we had in the most extreme way possible, limited access to mortgage financing to the extent of no mortgage financing for next to anyone, full stop. And as it slowly came back to life, it did such incrementally.
Next, we had MASSIVE housing surplus. I reference and site the data below. By late '08' it was a record setting 19 million vacant housing units. To put that in contrast that's more than the entire inventory of many states. Picture that, entire states worth of excess housing. We really went bonkers with over-building. I know, as I was one of them doing the building.
Today, the pendulum has fully swung as USA is with an estimated housing unit SHORTAGE of nearly 5 million units. Setting a completely polar opposite stage of things.
Now keep in mind why it was coining the Global Financial Collapse; because it was the 2nd worst "crash" in the history of the USA, secondly only to the Great Depression.
Now using this extreme of 08 GFC, which is so extreme it's the 2nd worst ever to have ever happened..... When mortgage's all but vanished, during a time of massive excess housing supply, kicking off massive recession, the median drop in housing values was 30%.
And the bottom was on average 3yrs later, with full recovery of "lost" housing values on average within 7yrs. Yes there was outliers to both extremes but best to keep to medians.
All this historical data of case study in-hand I think it's to say any housing "collapse" of 30% or more is off the table barring apocalypse.
I believe it's rather safe to say there is nothing out there that presents any realistic capability to stop all mortgage lending. So with that, I think it's also safe to say with massive unit shortage, it's equally safe to assume any "crash" would not have any chance of exceeding 50% of what '08' drop was.
Now we have capped things at 15%.
What we have next is MOTIVATION. What motivations do people have to sell there properties, at reduced prices. Because we don't have 3/4yr arm's resetting like ticking time bombs.
Per the data about 50% of households are sitting with 30yr locks at 4% or less. And about 75% have a lock under 5%.
Holy-cow! 25% of households held at significantly lower rates than today, making having to move be it to rent much more expensive than current housing expense. And 50% being about HALF or less than todays prevailing rates.....
Motivation couldn't be stronger to HOLD the properties, and mortgages persons have because the cost of loosing that is SIGNIFICANT.
Now one could argue what if a person looses their job.
Yup, that could happen. And if a person was strongly enough motivated to, like say risk of loosing their home and having to pay 2X as much as their mortgage for rent, they could get another job in a week. Yes, probably a much worse job but one COULD.
A person can readily go out and get 2,3 jobs on demand today, as there is currently about 7 million open jobs.
So by the numbers, to get to a matching recipe that made a 30% drop in home prices we would need to:
Eliminate about 8 million households, the people that is, poof gone. And being households that probably about 20 million people, if not more.
PLUS figure out some way to stop the global financial machine for a few months. This is one that's so difficult to figure out how to do it makes Thanos snapping 20 million people out of existence seem simple.
And then were there......
So as I have been saying for years, the absolute GARBAGE BS being put out by assorted wanna-b YT "gurus" telling wanna-b investors to "hold tight" some whatever half baked cracker jack theory of a 30% housing collapse is "imminent" is utter prairie frisbee's (rolling with your cattle theme).
I know the feelings are somethings gotta give, and we all have this fear baked into us because of what weve gone through in past decades. But this time, it really is different. Just like '08' was different from previously experienced things. And dot com was a bit different than prior ones. And S&L was a bit different from previous things. And and and.
Things rhyme, but they are always a bit different. That's why we tend to stumble into them like drunken sailors, and only realize the full fledged idiocy after the hang over.
This one feels to follow a theme more like 70's/80's. Erosion of wealth for most, explosion of wealth for the few. Complex mechanisms that few had any education even existed.
Man I really hope K-cars don't come back.... But I guess it's better than being seen in a Pinto.
- Per Google ai below -
Leading up to the 2008 financial crisis, there were approximately 3 to 3.5 million excess housing units built. By late 2008, the U.S. had a record 19 million vacant homes, a number that included about 2.23 million homes for sale and 4.1 million vacant for rent. This oversupply was a national phenomenon caused by a housing boom fueled by factors like speculation and subprime lending.
- Excess units built: Research suggests the boom cycle led to the construction of 3 to 3.5 million more housing units than were needed based on historical trends.
- Peak vacancy: By the fourth quarter of 2008, the total number of vacant homes reached a record 19 million, or roughly 11% of all housing units.
- Types of vacant homes: This total included a significant number of properties not for sale, such as seasonal homes (around 4.8 million) and rental vacancies.
- Homes for sale: Around 2.23 million empty homes were for sale, and 4.1 million were vacant and available for rent.
- ---- ---- ---- ---- ---- ----
- The USA has a housing shortage of approximately 4.7 million to 4.9 million units, according to 2023 and 2024 estimates from sources like Zillow Group and Brookings. This deficit has been growing, with new data from NewsNation and Brookings indicating an increase of 159,000 to 200,000 units in 2023 alone.
- ---- ---- ---- ---- ---- ----
- The total median U.S. home price drop from its peak during the 2008 Great Financial Crisis (GFC) and over the following five years resulted in a national average decline of nearly 30% from the market peak in early 2006 to its lowest point in 2011.
- ---- ---- ---- ---- ---- ----
- Approximately 52.5% to just over 54% of U.S. households with a mortgage have an interest rate of 4% or less, as of data from mid-to-late 2025.
- ---- ---- ---- ---- ---- ----
- Approximately 70% to 73.3% of U.S. mortgage borrowers have an interest rate of 5% or less. The vast majority of these are 30-year fixed-rate mortgages.
